You're not supposed to telnet directly into Citadel like you do with an IRC server (and, in fact, with some older Citadel-like systems). That port is for the client to connect to the server. Run the client instead (the supplied client is called 'citadel' oddly enough). To set up a public-facing text client, allow telnet or ssh users to connect to a copy of the Citadel client running on your system.